The evidence of OKex's fraudulent behavior, which may point to HitBTC as well

12 Sep, 2018
by Arthur Sillers
The evidence of OKex's fraudulent behavior, which may point to HitBTC as well

More and more crypto commentators accuse of OKex of being a scam, or engaging in fraudulent behavior. In a series of blog posts, Crypto Exchange Ranks (CER) has provided strong evidence of this fact, having analyzed public data from a number of large crypto exchanges to see if there was evidence of market manipulation. The results bring into question HitBTC's integrity as well.

Wash trading is a common type of market manipulation wherein an exchange simultaneously buys and sells a large number of assets in order to artificially inflate trade volume. Traditional markets are watched and regulated in order to disallow this type of manipulation, but crypto markets, in part due to their relative anonymity as well as the lack of institutional regulation, is quite prone to wash trading in particular.

The researchers at CER examined data from crypto exchanges, first finding unusual spikes in the ratio between trade volume and number of trades, and then used time-series analyses to try to spot any cyclical patterns, neither of which should be present in the random motion of markets and could indicate either trade washing events, or the turning on and off of auto-trader programs, which are a common way to enact wash trading schemes.

While HitBTC and to a lesser extent HuobiPro and Poloniex, showed some unusual cyclical activity, the authors do not confidently call this evidence of manipulation, noting that these are not strongly unusual patterns, and could indicate normal price fluctuations.

On the other hand, the researchers demonstrated that not only has Okex experienced a notably larger number of trade volume outliers, but these outliers also show a higher increase in volume to transaction ratio, meaning that Okex has had frequent spikes in trading volume which don't correspond to a spike in the actual number of transactions.

Moreover Okex does not provide historical trading records, which the researchers claiming that there is no real legitimate reason to avoid this transparency.

All in all, the researchers reported that HitBTC should be further investigated, and that OKex has conducted ‘volume manipulations, particularly wash trading, and definitely has something to hide.’

Read more - Head of operations at OKex comments on fraud case 

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